Japan’s biggest lender Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) said the Philippine market plays a crucial role in its goal to become Asia’s Tier 1 financial institution.
BTMU, which recently bought a 20-percent stake in the Philippines’ Security Bank Corp., said it envisions surpassing three of the biggest banks in Asia (HSBC, Citibank and Standard Chartered Bank) by 2020.
“The Philippines is one of the most important markets for the bank because the economy is strongly performing, and many Japanese companies have been advancing in the Philippines,” Go Watanabe, BTMU chief executive officer in Asia and Oceania Region, told reporters in a roundtable discussion on Tuesday.
“The Philippines is the missing part of BTMU. That is why we have decided to have a strategic alliance with Security Bank,” he added.
Watanabe said its P36.9-billion investment in the local lender, which is also the biggest capital infusion to date in the Philippine financial market, is part of BTMU’s strategy to identify the right partners in high growth markets and to deepen its presence in organic communities.
He said that with the partnership BTMU could now provide its strong base of Japanese customers with retail banking services using the local network of Security Bank.
With BTMU’s diverse global network, it can also provide global corporates and Filipino companies with services such as project and trade financing, he added.
For his part, BTMU General Manager Tadahiro Miyamoto, said that with the large consumer market in the Philippines, many Japanese firms are showing interest in expanding operations into the country.
Potential for auto industry
“There are many companies interested in the Philippine market. One is the retail segment such as food and apparels, but currently, probably the most interested segment is automotive,” he said.
Miyamoto added that if the Comprehensive Automotive Resurgence Strategy (CARS) program of the government becomes successful, there are potentially many Japanese manufacturers and suppliers that would be producing car parts in the Philippines, which would create even more investment opportunities for the sector.
Despite this, Watanabe said that encouraging more manufacturing firms to do business in the country is a bit challenging because of the lack of incentives and persistent gaps in infrastructure and power generation.
“The challenge for the Philippines is how to encourage overseas companies, especially manufacturing, to invest in this country. In that respect, BTMU is willing to support the country to encourage them to invest more in the Philippines,” he said.
“More than 100 million population is a good big market. If the government will think about good incentives, I think it will be a good chance for the Philippines to increase the entry of foreign direct investments, not only from Japan but also from other countries,” he added.
Meanwhile, Miyamoto said improvement in other areas such as infrastructure, and the cost and reliability of electricity are also needed.
“There are a lot of projects going on. We hope that those will be realized soon so that there will be more general support for Japanese companies to invest more here,” he said.
Interested in PPP
In this regard, Watanabe said the public-private partnership program (PPP) of the government, particularly in infrastructure, is necessary for the country.
“Japanese companies are showing strong interest in participating in the PPP. BTMU as the best project finance bank, together with good peso liquidity from Security Bank, means our team is the best team to support the PPP and encourage Japanese customers to participate in the PPP. This will be very beneficial to this country,” he said.
At present, Miyamoto said BTMU has no PPP investment yet, but the bank has been looking to participate in projects included in the pipeline.
One particular project that the BTMU is interested in is the Clark Green City, which includes access and inter-city roads, a railway system, a mixed-use residential and commercial block, business district, industrial estates, schools and centers, government offices, and other facilities that would make up a major city.
At full development, the city is estimated to accommodate some 1.12 million residents and 800,000 workers.
“It is a very good project. It creates a lot of positivity for the Philippines and we will see what we can do,” Miyamoto said.
Another project that can be considered by BTMU is the North-South Railways Project, Watanabe added.